Mr. Chris Seto reports

SPECTRAL MEDICAL INC. ANNOUNCES C$8.5 MILLION BOUGHT DEAL CONVERTIBLE NOTE FINANCING

Spectral Medical Inc. has entered into an agreement with Paradigm Capital Inc., in connection with a bought deal private placement consisting of the sale of 9 per cent convertible notes of the company at a price of $1,000 (U.S.) per convertible note due on May 1, 2028, for gross proceeds of approximately $8.5-million. The holders of the convertible notes may convert all or any portion of the convertible notes into common shares of the company at a conversion price of 52 cents per common share, subject to customary anti-dilution adjustments and in integral multiples of $1,000 (U.S.) principal amount at any time prior to the maturity date. The convertible notes are convertible into approximately 16.4 million common shares (or approximately 18.8 million common shares if the overallotment option, as described herein, is exercised in full), subject to customary anti-dilution and make whole fundamental change adjustments.

The company has granted the underwriter an option to sell up to that number of additional convertible notes equal to 15 per cent of the base size of the offering, on the same terms and conditions as set out herein, exercisable in whole or in part at any time up to 48 hours prior to the closing date (as defined herein).

The net proceeds from the offering are expected to be primarily used by the company on its phase III registration trial (Tigris) for its PMX treatment for endotoxemic septic shock and for general corporate and working capital purposes.

The offering is expected to close on or about May 23, 2024, and will be subject to regulatory approvals and customary closing conditions, including listing of the common shares issuable upon conversion of the notes on the Toronto Stock Exchange.

About Spectral Medical Inc.

Spectral is a phase 3 company seeking U.S. Food and Drug Administration approval for its unique product for the treatment of patients with septic shock, Toraymyxin (PMX). PMX is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream and is guided by the company's endotoxin activity assay (EAA), the only FDA-cleared diagnostic for the risk of developing sepsis.

PMX is approved for therapeutic use in Japan and Europe and has been used safely and effectively on more than 340,000 patients to date. In March, 2009, Spectral obtained the exclusive development and commercial rights in the United States for PMX, and in November, 2010, signed an exclusive distribution agreement for this product in Canada. In July, 2022, the United States Food and Drug Administration granted breakthrough device designation for PMX for the treatment of endotoxic septic shock. Approximately 330,000 patients are diagnosed with septic shock in North America each year.

The Tigris trial is a confirmatory study of PMX in addition to standard care versus standard care alone and is designed as a 2:1 randomized trial of 150 patients using Bayesian statistics. Endotoxic septic shock is a malignant form of sepsis.

The trial methods are detailed in "Bayesian methods: a potential path forward for sepsis trials."

We seek Safe Harbor.